Property Taxes in Houston: The Essentials to Understand and Save

Angie Farish
6 days ago
2 min read

Why Are Taxes High in Texas? The Key: No State Income Tax!

In Texas, we don't pay state income tax. So how are schools, roads, and services funded? Through property taxes! They are the main source of local revenue, which is why they are higher than in other states. They are based on your property's value (an 'ad valorem' tax).

How Much Will You Pay and How is it Calculated?

The amount depends on your property's appraised value (assigned by the Appraisal District) and the tax rates set by local entities (City, County, School District). In Harris County, the average effective rate is around 1.77% of the appraised value. For example, a $300,000 home with a combined rate of 2.5% would pay $7,500 annually.

Save Money! Key Exemptions You Should Know

Exemptions are your best ally to reduce your tax bill:

• Homestead Exemption: If your home is your primary residence as of January 1st, you qualify. In Harris County, in addition to the state exemption of $100,000 for school taxes, there's an optional 20% of your appraised value (minimum $5,000). Apply between January 1st and April 30th!

• Benefits for Seniors (Over 65): An additional $10,000 exemption and, most importantly, a cap on your school taxes. Your school tax bill won't increase beyond a certain limit!

• Support for Disabled Veterans: Exemptions ranging from $5,000 to $12,000 depending on your disability rating. If you have a 100% disability or are deemed unemployable, you are completely exempt from property taxes on your primary residence!

Important! If you meet the requirements, you can combine these exemptions to maximize your savings.

Investment Properties: You'll Pay Full Value

Exemptions (Homestead, Senior, Veteran) only apply to your primary residence. Investment properties or second homes pay taxes on their full appraised value. Keep this in mind if you invest in real estate in Houston.

Houston vs. Other States: A Quick Look

Each state has its own system. In Texas, property taxes are higher due to the absence of state income tax. Other states like Florida have lower rates, while New York and California have their own complexities (like Proposition 13 in California, which limits the annual increase in appraised value).

Understand and Save on Your Houston Property Taxes

Understanding how property taxes work in Houston and taking advantage of exemptions is key to your finances. Being informed empowers you to make smarter financial decisions and potentially save a significant amount of money each year. Don't let it be a mystery!